Kraft Heinz CEO expects innovation push to accelerate next year

By Alexander Marrow

LONDON, June 3 (Reuters) - Kraft Heinz aims to accelerate product innovation next year, CEO Steve Cahillane told Reuters, as the packaged food company steps up investment to reverse years of market share losses.

Cahillane, who took the helm in January, has earmarked $600 million for marketing and R&D this year to rebuild innovation and revive the main U.S. business which generates almost 70% of sales.

"Next year is going to be better because we've put a lot of changes in place around the R&D, around process improvement, around resource allocation that will lead to a better innovation pipeline for 2027 than we had in 2026," Cahillane said, without providing details.

The push comes as Kraft Heinz expands into higher-protein and lower-sugar products, launching a protein-infused version of its popular Mac & Cheese in March, followed by electrolyte-enhanced Capri Sun drinks and adding to its sugar-free Heinz Zero range, targeting consumers shifting toward healthier options.

"You've got to be willing to step out there and extend your brand a little bit and try things," said Ross Glotzbach, CEO and director of research at a Kraft Heinz investor, Southeastern Asset Management, who supported the moves.

The renewed focus follows a long period where the company has been one of the sector's worst performers, losing market share for the last decade to both rival conglomerates and challenger brands such as Goodles amid underinvestment, cost cuts and rising competition from healthier and private‑label brands.

The company's shares are down 3.8% this year but have significantly outperformed peers such as Conagra Brands and Campbell's, whose shares have lost around 25%, suggesting support for the strategy from investors.

WILL INNOVATION BE ENOUGH?

Cahillane's biggest decision in his first weeks as CEO was to freeze plans to split the company in two - one focused on groceries and the other on sauces and spreads - saving $300 million.

Analysts say sustained growth for the combined group will require continued investment, as Kraft Heinz competes in low-growth categories.

Kraft Heinz's U.S. volumes fell 4.1% in the four weeks to May 16 compared with a year earlier and dollar sales were down 1.9%, said BNP Paribas analyst Max Gumport, citing Nielsen data.

"That's not going to be a sustainable outcome after $600 million of investment," said Gumport. "When you get to the end of this year, they will need to invest more, because what you need is volumes to be flat and dollar sales up for this business to work."

Kraft Heinz is also pledging to absorb about 80% of inflation this year rather than risk trying to pass it on to customers, limiting its ability to offset costs and increasing reliance on new products to drive growth.

Cahillane said the company will step up spending further if early gains from new products continue.

The proportion of the company's products that were holding or gaining market share rose to 58% in March from 21% at the end of 2025, Kraft Heinz said in May.

"Some of the early returns we're seeing gives us optimism that we might have the opportunity to invest even more," he said.

(Reporting by Alexander Marrow; Editing by Lisa Jucca and Elaine Hardcastle)